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Amendment To Business Loan Agreements

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Sectors: Utilities
Governing Law: California , View California State Laws
Effective Date: April 04, 1997
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Exhibit 10.18


Amendment to Business Loan Agreements


(a) Bank of America


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Business Loan Agreement


This Agreement dated as of May 3, 1999 is among Bank of America National Trust and Savings Association (the "Bank"), California Water Service Group ("Borrower 1") and CWS Utility Services ("Borrower 2") (Borrower 1 and Borrower 2 are sometimes referred to collectively as the "Borrowers" and individually as the "Borrower").


1. LINE OF CREDIT AMOUNT AND TERMS


1.1 Line of Credit Amount.


(a) During the availability period described below, the Bank will provide a
line of credit to the Borrowers. The amount of the line of credit (the
"Commitment") is Twenty Million and 00/1 00 Dollars ($20,000,000.00).


(b) This is a revolving line of credit providing for cash advances and
letters of credit. During the availability period, the Borrowers may
repay principal amounts and reborrow them.


(c) The Borrowers agree not to permit the outstanding principal balance of
advances under the line of credit plus the outstanding amounts of any
letters of credit, including amounts drawn on letters of credit and not
yet reimbursed, to exceed the Commitment.


1.2 Availability Period. The line of credit is available between the date
of this Agreement and April 30, 2001 (the "Expiration Date") unless any
Borrower is in default.


1.3 Interest Rate.


(a) The interest rate is the Bank's Reference Rate minus 0.5 percentage
points.


(b) The Reference Rate is the rate of interest publicly announced from time
to time by the Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans. The Bank may price loans to its customers at,
above, or below the Reference Rate. Any change in the Reference Rate
shall take effect at the opening of business on the day specified in
the public announcement of a change in the Bank's Reference Rate.


1.4 Repayment Terms.


(a) The Borrowers will pay interest on June 1, 1999, and then monthly
thereafter until payment in full of any principal outstanding under
this line of credit.


(b) The Borrowers will repay in full all principal and any unpaid interest
or other charges outstanding under this line of credit no later than
the Expiration Date. Any interest period for an optional interest rate
(as described below) shall expire no later than the Expiration Date.


1.5 Optional Interest Rates. Instead of the interest rate based on the Bank's Reference Rate, the Borrowers may elect the optional interest rates listed below during interest periods agreed to by the Bank and the Borrowers. The optional interest rates shall be subject to the terms and conditions described


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later in this Agreement. Any principal amount bearing interest at an optional rate under this Agreement is referred to as a "Portion." The following optional interest rates are available:


(a) Fixed Rates.


(b) the LIBOR Rate plus 1.25 percentage points.


1.6 Letters of Credit.


(a) This line of credit may be used for financing:


(i) standby letters of credit with a maximum maturity of 365 days
but not to extend beyond December 31, 2001. The standby
letters of credit may include a provision providing that the
maturity date will be automatically extended each year for an
additional year unless the Bank gives written notice to the
contrary; provided, however, that each letter of credit must
include a final maturity date which will not be subject to
automatic extension. - --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
(ii) The amount of letters of credit outstanding at any one time
(including amounts drawn on letters of credit and not yet
reimbursed) may not exceed Ten Million and 00/1 00 Dollars ($1
0,000,000.00).


(b) Each Borrower agrees:


(i) any sum drawn under a letter of credit may, at the option of the
Bank, be added to the principal amount outstanding under this
Agreement. The amount will bear interest and be due as described
elsewhere in this Agreement.


(ii) if there is a default under this Agreement, to immediately
prepay and make the Bank whole for any outstanding letters of
credit.


(iii) the issuance of any letter of credit and any amendment to a
letter of credit is subject to the Bank's written approval and
must be in form and content satisfactory to the Bank and in
favor of a beneficiary acceptable to the Bank.


(iv) to sign the Bank's form Application and Agreement for Standby
Letter of Credit.


(v) to pay any issuance and/or other fees that the Bank notifies the
Borrowers will be charged for issuing and processing letters of
credit for the Borrowers.


(vi) to allow the Bank to automatically charge its checking account
for applicable fees, discounts, and other charges.


2. OPTIONAL INTEREST RATES


2.1 Optional Rates. Each optional interest rate is a rate per year. Interest will be paid on the last day of each interest period, and on the first day of each month during the interest period. At the end of any interest period, the interest rate will revert to the rate based on the Reference Rate, unless the Borrowers have designated another optional interest rate for the Portion. No Portion will be converted to a different interest rate during the applicable interest period. Upon the occurrence of an event of default under this Agreement, the Bank may terminate the availability of optional interest rates for interest periods commencing after the default occurs.


2.2 Fixed Rate. The election of Fixed Rates shall be subject to the
following terms and requirements:


(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrowers agree will apply to the Portion during the applicable
interest period.


(b) The interest period during which the Fixed Rate will be in effect will
be one year or less.


(c) Each Fixed Rate Portion will be for an amount not less than the
following:


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(i) for interest periods of 91 days or longer, Five Hundred
Thousand Dollars ($500,000).


(ii) for interest periods of between 30 days and 90 days, One
Million Dollars ($1,000,000).


(iii) for interest periods of between 2 days and 29 days, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than thirty million (30,000,000)
dollar-days.


(iv) for interest periods of 1 day, Fifteen Million Dollars
($15,000,000).


(d) Each prepayment of a Fixed Rate Portion, whether voluntary, by reason
of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee as
described below. A "prepayment" is a payment of an amount on a date
earlier than the scheduled payment date for such amount as required by
this Agreement. The prepayment fee shall be equal to the amount (if
any) by which:


(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds


(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market,
or other appropriate money market selected by the Bank for a
period starting on the date on which it was prepaid and ending
on the last day of the interest period for such Portion (or
the scheduled payment date for the amount prepaid, if
earlier).


5


2.3 LIBOR Rate. The election of LIBOR Rates shall be subject to the
following terms and requirements:


(a) The interest period during which the LIBOR Rate will be in effect will
be one, two or three weeks, or one, two, three, four, five, six, seven,
eight, nine, ten, eleven, or twelve months. The first day of the
interest period must be a day other than a Saturday or a Sunday on
which the Bank is open for business in California, New York and London
and dealing in offshore dollars (a "LIBOR Banking Day"). The last day
of the interest period and the actual number of days during the
interest period will be determined by the Bank using the practices of
the London inter-bank market.


(b) Each LIBOR Rate Portion will be for an amount not less than the
following:


(i) for interest periods of four months or longer, Five Hundred
Thousand Dollars ($500,000).


(ii) for interest periods of one, two or three months, One Million
Dollars ($1,000,000).


(iii) for interest periods of one, two or three weeks, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than thirty million (30,000,000)
dollar-days.


(c) The "LIBOR Rate" means the interest rate determined by the following
formula, rounded upward to the nearest 1 /1 00 of one percent. (All
amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)


LIBOR Rate = London Inter-Bank Offered Rate
-----------------------
(1.00 - Reserve Percentage)


Where,


(i) "London Inter-Bank Offered Rate" means the interest rate at
which the Bank's London Branch, London, Great Britain, would
offer U.S. dollar deposits for the applicable interest period
to other major banks in the London inter-bank market at
approximately 1 1:00 a.m. London time two (2) London Banking
Days before the commencement of the interest period. A "London
Banking Day" is a day on which the Bank's London Branch is
open for business and dealing in offshore dollars.


(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D,
rounded upward to the nearest 1 /1 00 of one percent. The
percentage will be expressed as a decimal, and will include,
but not be limited to, marginal, emergency, supplemental,
special, and other reserve percentages.


(d) The Borrowers shall irrevocably request a LIBOR Rate Portion no later
than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above. For example, if there are no intervening holidays or
weekend days in any of the relevant locations, the request must be made
at least three days before the LIBOR Rate takes effect.


(e) The Borrowers may not elect a LIBOR Rate with respect to any principal
amount which is scheduled to be repaid before the last day of the
applicable interest period.


Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below. A "prepayment" is a payment of an amount on a date earlier than the scheduled payment date for such amount as required by this Agreement. The prepayment fee shall be equal to the amount (if any) by which:


(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been
prepaid, exceeds


6


(ii) the interest which would have been recoverable by the Bank by
placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other
appropriate money market selected by the Bank, for a period
starting on the date on which it was prepaid and ending on the
last day of the interest period for such Portion (or the
scheduled payment date for the amount prepaid, if earlier).


(g) The Bank will have no obligation to accept an election for a LIBOR Rate
Portion if any of the following described events has occurred and is
continuing:


(i) Dollar deposits in the principal amount, and for periods equal to
the interest period, of a LIBOR Rate Portion are not available in
the London inter-bank market; or


3. EXPENSES


3.1 Expenses. The Borrowers agree to immediately repay the Bank for expenses
that include, but are not limited to, filing, recording and search fees,
appraisal fees, title report fees and documentation fees.


3.2 Reimbursement Costs.


(a) The Borrowers agree to reimburse the Bank for any expenses it incurs in
the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable aftorneys'fees, including any allocated costs of the Bank's
in-house counsel.


4. DISBURSEMENTS, PAYMENTS AND COSTS


4.1 Requests for Credit; Equal Access by all Borrowers. Any Borrower (or a person or persons authorized by any one of the Borrowers), acting alone, can borrow up to the full amount of credit provided under this Agreement. Each Borrower will be liable for all extensions of credit made under this Agreement to any other Borrower. Each request for an extension of credit will be made in writing in a manner acceptable to the Bank, or by another means acceptable to the Bank.


4.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrowers will be:


(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;


(b) made for the account of the Bank's branch selected by the Bank from time
to time;


(c) made in immediately available funds, or such other type of funds
selected by the Bank;


(d) evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrowers to sign one or more promissory notes.


4.3 Telephone and Telefax Authorization.


(a) The Bank may honor telephone or telefax instructions for advances or
repayments given by any one of the individuals authorized to sign loan
agreements on behalf of each Borrower, or any other individual
designated by any one of such authorized signers.


(b) Advances will be deposited in and repayments will be withdrawn from
Borrower l's account number 14878-03863, or such other accounts with the
Bank as designated in writing by the Borrowers.


(c) The Borrowers indemnify and excuse the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in connection
with any act resulting from telephone or telefax instructions the Bank
reasonably believes are made by any individual authorized by the
Borrowers to give such instructions. This indemnity and excuse will
survive this Agreement's termination.


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4.4 Direct Debit.


(a) The Borrowers agree that interest and any fees will be deducted
automatically on the due date from Borrower `s account number
14878-03863, or such other of the Borrowers' accounts with the Bank as
designated in writing by the Borrowers.


(b) The Bank will debit the account on the dates the payments become due.
If a due date does not fall on a banking day, the Bank will debit the
account on the first banking day following the due date.


(c) The Borrowers will maintain sufficient funds in the account on the
dates the Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date the Bank enters any debit
authorized by this Agreement, the debit will be reversed.


4.5 Banking Days. Unless otherwise provided in this Agreement, a banking day is a day other than a Saturday or a Sunday on which the Bank is open for business in California. All payments and disbursements which would be due on a day which is not a banking day will be due on the next banking day. All payments received on a day which is not a banking day will be applied to the credit on the next banking day.


- -------------------------------------------------------------------------------- 4.6 Taxes. If any payments to the Bank under this Agreement are made from outside the United States, the Borrowers will not deduct any foreign taxes from any payments they make to the Bank. If any such taxes are imposed on any payments made by the Borrowers (including payments under this paragraph), the Borrowers will pay the taxes and will also pay to the Bank, at the time interest is paid, any additional amount which the Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such taxes had not been imposed. The Borrowers will confirm that they have paid the taxes by giving the Bank official tax receipts (or notarized copies) within 30 days after the due date.


4.7 Additional Costs. The Borrowers will pay the Bank, on demand, for the Bank's costs or losses arising from any statute or regulation, or any request or requirement of a regulatory agency which is applicable to all national banks or a class of all national banks. The costs and losses will be allocated to the loan in a manner determined by the Bank, using any reasonable method. The costs include the following:


(a) any reserve or deposit requirements; and


(b) any capital requirements relating to the Bank's assets and commitments
for credit.


4.8 Interest Calculation. Except as otherwise stated in this Agreement, all interest and fees, if any, will be computed on the basis of a 360-day year and the actual number of days elapsed. This results in more interest or a higher fee than if a 365-day year is used. Installments of principal which are not paid when due under this Agreement shall continue to bear interest until paid.


4.9 Default Rate. Upon the occurrence and during the continuation of any default under this Agreement, principal amounts outstanding under this Agreement will at the option of the Bank bear interest at a rate which is 2 percentage point(s) higher than the rate of interest otherwise provided under this Agreement. This will not constitute a waiver of any default.


4.10 Interest Compounding. At the Bank's sole option in each instance, any interest, fees or costs which are not paid when due under this Agreement shall bear interest from the due date at the Bank's Reference Rate minus 0.05 percentage points. This may result in compounding of interest.


5. CONDITIONS


The Bank must receive the following items, in form and content acceptable to the Bank, before it is required to extend any credit to the Borrowers under this Agreement:


5.1 Authorizations. Evidence that the execution, delivery and performance by each Borrower and each guarantor of this Agreement and any instrument or agreement required under this Agreement have been duly authorized.


5.2 Governing Documents. A copy of each Borrower's articles of incorporation.


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5.3 Other Items. Any other items that the Bank reasonably requires.


6. REPRESENTATIONS AND WARRANTIES


When the Borrowers sign this Agreement, and until the Bank is repaid in full, each Borrower makes the following representations and warranties. Each request for an extension of credit constitutes a renewed representation:


6.1 Organization of Borrowers. Each Borrower is a corporation duly formed and existing under the laws of the state where organized.


6.2 Authorization. This Agreement, and any instrument or agreement required hereunder, are within each Borrower's powers, have been duly authorized, and do not conflict with any of its organizational papers.


6.3 Enforceable Agreement. This Agreement is a legal, valid and binding agreement of each Borrower, enforceable against each Borrower in accordance with its terms, and any instrument or agreement required hereunder, when executed and delivered, will be similarly legal, valid, binding and enforceable.


6.4 Good Standing. In each state in which each Borrower does business, it is properly licensed, in good standing, and, where required, in compliance with fictitious name statutes.


6.5 No Conflicts. This Agreement does not conflict with any law, agreement, or obligation by which any Borrower is bound.


- -------------------------------------------------------------------------------- 6.6 Financial Information. All financial and other information that has been or will be supplied to the Bank is:


(a) sufficiently complete to give the Bank accurate knowledge of the
Borrowers' (and any guarantor's) financial condition, including all
material contingent liabilities.


(b) in compliance with all government regulations that apply.


6.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrowers or any one of them which, if lost,
would impair the Borrowers' or any Borrower's financial condition or
ability to repay the loan, except as have been disclosed in writing to
the Bank.


6.8 Permits, Franchises. Each Borrower possesses all permits, memberships, franchises, contracts and licenses required and all trademark rights, trade name rights, patent rights and fictitious name rights necessary to enable it to conduct the business in which it is now engaged.


6.9 Other Obligations. No Borrower is in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation.


6.10 Income Tax Matters. No Borrower has any knowledge of any pending assessments or adjustments of its income tax for any year.


6.11 No Event of Default. There is no event which is, or with notice or lapse of time or both would be, a default under this Agreement.


6.12 Location of Borrowers. Each Borrower's place of business (or, if any Borrower has more than one place of business, its chief executive office) is located at the address listed under the Borrowers' signature on this Agreement.


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6.13 Year 2000 Compliance. Each Borrower has conducted a comprehensive review and assessment of its systems and equipment applications and made inquiry of such Borrower's key suppliers, vendors and customers with respect to the loyear 2000 problem" (that is, the inability of computers, as well as embedded microchips in non-computing devices, to properly perform date-sensitive functions with respect to certain dates prior to and after December 31, 1999). Based on that review and inquiry, none of the Borrowers believes the year 2000 problem, including costs of remediation, will result in a material adverse change in its business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit. Each Borrower has developed adequate contingency plans to ensure uninterrupted and unimpaired business operation in the event of a failure of its own or a third party's systems or equipment due to the year 2000 problem, including those of vendors, customers, and suppliers, as well as a general failure of or interruption in its communications and delivery infrastructure.


7. COVENANTS


The Borrowers agree, so long as credit is available under this Agreement and until the Bank is repaid in full:


7.1 Use of Proceeds. To use the proceeds of the credit only for short term operating capital, bridge financing for capital expenditures and issuing standby letters of credit.


7.2 Financial Information. To provide the following financial information and statements in form and content acceptable to the Bank, and such additional information as requested by the Bank from time to time:


(a) Within 90 days of Borrower 1's fiscal year end, Borrower 1's annual
financial statements. These financial statements must be audited (with
an unqualified opinion) by a Certified Public Accountant ("CPA")
acceptable to the Bank. The statements shall be prepared on a
consolidated basis.


(b) Within 60 days of the period's end, Borr
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